What makes Singapore such an attractive destination for startups to build their base and grow?
Home to 4,500 startups, 220 incubators, and accelerators backed by 510 investors, the little red dot proves its might as a leading startup ecosystem in Southeast Asia and the world. Over the last decade, its reputation for attracting startups has grown exponentially.
With a thriving tech scene, world-class infrastructure, and supportive government policies, it comes as no surprise that Singapore has become the go-to destination for aspiring entrepreneurs.
In this blog, we explore the key reasons that compel startups to call Singapore home, and how it is faring against the shortfall of funding affecting startups around the world.
The Singapore Scene: A Hotbed for Startups
The Global Startup Ecosystem Report 2024 (GSER 2024) offers an in-depth assessment of the present state of startups around the world and their valuable insights. According to its Global Startup Ecosystem Ranking, Singapore has climbed 8 places from 16th position in 2020 to 7th in 2024. This puts it ahead of other well-known locations, such as Beijing, Seoul, Tokyo, and Shanghai. In Asia, it ranks first.
As one of the most popular startup hubs in the world, Singapore is home to 20 unicorns as of 2024, most of which have operations throughout the entire Southeast Asian region. Today, it is home to world-famous companies, such as Grab, Sea Limited, Nium, and YouTrip.
Singapore’s Startup Growth
Singapore’s reputation for fostering startups only began developing over the last decade. Back in 2012, only 104 funding deals amounting to S$329 million were made, a seemingly slow start in what looked like an innovation desert of a nation struggling to attract investors.
In 2017, the Singapore government established Startup SG, an agency focused on exploring Singapore’s startup initiatives and programmes. With the support of various government agencies and private organisations, Startup SG has been successful in creating a vibrant startup ecosystem that offers access to funding, talent, and resources.
Since then, Singapore has been dubbed the “Silicon Valley of Asia”, and it continues to attract robust funding with significant growth, topping major indexes to become the preferred place for startups. It ended 2023 with a total deal volume of S$8.5 billion across 522 deals, a stark contrast with 2012.
Why Are There More Startup Companies in Singapore?
There are several reasons why the number of Singapore startups has grown exponentially. We explore some of the more prominent ones:
Capturing Promising Startup Sub-sectors
Singapore
In fact, the Lion City has made cleantech innovation a key aspect of its Green Plan 2030, with plenty of support for research on sustainable technologies through government agencies like the National Environment Agency and the Economic Development Board (EDB).
Additionally, ranked as the most innovative economy in Asia according to the 2023 World Intellectual Property Organisation’s Global Innovation Index, it is well-poised to go further in the cleantech industry and cement itself as a global hub.
A Nation Built on Innovation
Singapore’s position as Asia’s most innovative economy did not happen overnight. Throughout the years, the government has laid down plenty of groundwork, implementing forward-looking policies and initiatives to foster innovation. Programmes like the Research, Innovation, and Enterprise (RIE) plan allocate significant funding to R&D and innovation activities.
The city-state has also developed advanced research and technology hubs such as one-north, Biopolis, and Fusionopolis, which provide state-of-the-art facilities for research and collaboration. It also boasts excellent digital infrastructure and high-speed internet connectivity to support the growth of tech-driven industries and innovation.
A Conducive Environment for Growth
Over the years, Singapore has created a favourable climate for startups to expand. For example, it offers one of the lowest tax rates in the region for SMEs, coupled with tax exemptions for startups making less than S$100,000 yearly. It has strong intellectual property (IP) rights that give companies, particularly technology firms, the confidence to invest in research and development (R&D).
It also has various government incentives, schemes, accelerators, incubators, and partnerships. Agencies such as Startup SG and Enterprise Singapore (ESG) allow startups to tap into funding schemes such as the Startup SG Founder Grant, Startup SG Tech, and Enterprise Development Grant (EDG). Spaces such as JTC’s LaunchPad serve as an ideal location for startups to build relationships with larger companies, collaborate in a friendly ecosystem, and grow.
And, in the United States, companies in Singapore can tap the Global Innovation Alliance (GIA) node set up in San Francisco’s Bay Area and New York City to access market opportunities and scale internationally.
Strategic Location in Southeast Asia
Singapore enjoys a geographical advantage. Situated in the heart of Southeast Asia at the crossroads of major global trade routes, it serves as a strategic gateway to the fast-growing markets of the region and beyond, including China, India, and ASEAN countries. This offers startups access to a large and diverse customer base.
Weathering the Funding Winter
2023 was a challenging year for startups worldwide. Despite easing inflation and global GDP growth exceeding forecasts, the value of large exits decreased 47% year-on-year compared to 2022, and the “tech winter” persisted, with worldwide Series A funding falling 46% in 2023 compared to 2022.
This meant that capital and talent continued to be locked in for a longer time rather than being moved on to their next venture. Early-stage startups would also need help procuring sufficient funding. Late-stage startups would have needed help deciding between obtaining another funding round or exiting early at a lower valuation.
These situations highlight the reduced startup ecosystem growth potential due to the exit slowdown. This has been the case since the 1st quarter of 2022 when stock markets began dipping. Such prolonged poor performance ultimately led to more conservative yet demanding behaviour from venture capitalists (VCs).
In fact, Asia also experienced its lowest venture funding value since 2015 in 2023, marking a 5-year global low. Despite this, Singapore’s total deal value has stayed resilient, showing a 33% increase above 2020 levels, with the share of early-stage funding increasing from 90% the year before to 94% in 2023, a figure contrasting with global trends.
It shows that Singapore’s startup ecosystem stands strong, where more emerging startups, particularly those in deep tech sectors where capital requirements are much higher, could better weather the funding winter compared to global equivalents.
Set Up Your Startup in Singapore With InCorp
At InCorp, our incorporation experts are well-poised to help you establish your startup in Singapore and other budding countries in Southeast Asia such as Indonesia and Vietnam. With our extensive knowledge of local laws and regulations, we can guide you through the process of incorporating your company.
We also offer a range of services such as company registration, corporate secretarial services, and accounting and tax support. Contact us to find out more about how we can assist!
FAQs about Startup Companies in Singapore
- Singapore is good for startups for a variety of reasons, such as its central location in Southeast Asia, ease of doing business, and pro-business policies.
- 4,500 startups are currently registered in Singapore.
- Some of the top startup companies in Singapore are Grab, Razer, and Sea Group.
Incorporate your startup in Singapore easily with our help!
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